
Exact Sciences Delivers a Strong 3Q23; Signs that Test Acquisition Costs are Declining and Discussion on Pricing Increase for 2nd Generation Cologuard Could Bode Well for Future Profitability
11-2-23 (by: Scott Gleason) Exact Sciences has reported its third-quarter 2023 results and reported total revenue of $628.3 million, marking a 20% increase compared to the same period in 2022. Analysts had been forecasting total revenue of $626.8 million in the quarter. In the quarter, Exact Sciences achieved a significant milestone by delivering more than 1 million test results during the third quarter of 2023 with its highest number of Cologuard® and Oncotype DX® tests in a quarter. 331,000 physicians have now ordered Cologuard with 169,000 ordering in the quarter, and there are positive signs that the companies patient acquisition costs are coming down which could lead to significant profitability growth in coming years as awareness around the product becomes more prominent requiring less advertising and sales resources. The company highlighted the results of its recent BLUE-C study results on its next generation colorectal cancer test which showed higher sensitivity and specificity, especially for precancerous adenomas. The company discussed the potential for higher pricing for this product given the incremental value to the healthcare system. The company also noted its expansion internationally with Japan poised to become the largest market outside the United States for the test.
Screening revenue, including laboratory service revenue from Cologuard tests and PreventionGenetics, experienced a substantial 31% increase. Precision Oncology revenue, including laboratory service revenue from global Oncotype DX and therapy selection tests, saw a 3% increase, or 5% on a core revenue basis. The company recently sold its prostate cancer prognostic test to MDx Health.
EPS in the quarter were $0.00 versus the street at ($0.48), however the company reported a significant gain on the sale of an asset in the quarter. EBITDA and adjusted EBITDA reached $61.2 million and $56.3 million, respectively. Importantly, the company generated positive cash flow from operating activities which amounted to $24.4 million, and free cash flow was $(0.8) million. The company finished the quarter with $734.4 million in cash, cash equivalents, and marketable securities.
In light of their performance in the third quarter Exact Sciences raised its full-year 2023 guidance. The company raised the midpoints for both revenue and adjusted EBITDA by $28 million and $25 million, respectively. The company now anticipates total revenue in the range of $2.476 to $2.486 billion. This guidance includes expectations for Screening revenue of $1.848 to $1.853 billion, Precision Oncology revenue estimated to be in the range of $622 to $627 million, and COVID-19 testing revenue expected to be $6 million. At the mid-point of the guidance, the company is implying fourth quarter revenues of roughly $628 million, flat with the current quarter.
Kevin Conroy, chairman and CEO of Exact Sciences, emphasized the significance of their results, stating, “Exact Sciences’ third-quarter results reflect our unwavering dedication to improving cancer care on a global scale. Our team delivered answers to more patients than ever before, giving us confidence to raise our full-year revenue and adjusted EBITDA guidance. To achieve our mission to eradicate cancer, we’ll continue to focus on making our current and future tests the top choice for patients and healthcare professionals globally.”